While 2022 saw retail media emerge in the grocery industry, this past year marked this type of marketing becoming a necessity for grocers to connect with shoppers, remain competitive in the industry and please brand partners.
Regional and specialty retailers, such as Sprouts Farmers Market and Giant Eagle, joined national grocers in the retail media space. Across the board, grocers focused on omnichannel and digital capabilities for their retail media growth in 2023 — such Firework and The Fresh Market expanding their shoppable videos partnership and Dollar General’s retail media network linking with Meta to allow advertisers to reach shoppers through their social media profiles.
“I think retail media had the remarkable year that we all hoped and expected it would,” said Jordan Berke, a former Walmart e-commerce executive who is founder and CEO of Tomorrow Retail Consulting. “The leaders within the retail media market really became media moguls [and] they arrived at a level of quality in their advertising products, their analytics, in their services that rivals the Metas and Googles of the world.”
Between January and November of last year, ad spending by food brands hit $717 million, up from the $629 million recorded for the same period in 2022, according to an analysis from MediaRadar.
By the end of 2024, omnichannel retail media ad spend is projected to reach $59.98 billion, per Insider Intelligence’s October 2023 forecast.
But as in-store shopping has roared back to prominence, retailers are under pressure to bring retail media into the aisles and checkout lanes of their physical locations.
So despite omnichannel growth dominating retail media last year, industry experts anticipate grocers to shift focus to in-store retail media technologies in 2024. As a result, consumers can expect to see more digital screens, interactive kiosks and in-store app capabilities as part of an effort to further tie together the in-store experience with retail media’s reach.
The Power of Personalization
In addition to generating valuable additional revenue, connecting with consumers is a key reason retail media has become crucial for retailers. Grocers will work to replicate online personalization into targeted in-store shopping experiences for their customers in 2024, experts say.
“If I’m going to come in the store, you need to know me as well as you know me online,” said Anne Mezzenga, co-CEO of retail blog Omni Talk and a former Target executive.
By making retailers’ apps an everyday utility, grocers can begin incentivizing customers to shop in-store, Berke said. He gave the example that only 22% of Kroger’s promotions are digital-only deals, according to his firm’s research, making the rest of its discounts targeted to customers shopping in person. That allows Kroger to monetize and personalize customers’ shopping trips, he said.
Grocer’s apps and other targeted ads are not restricted to a customer’s phone. Instacart began piloting ads on its Caper smart carts at Good Food Holdings banner stores earlier this month to show customers dynamic ads and promotions at the beginning of a shopping trip along with personalized recommendations based on real-time shopping behaviors.